The Hypothetical Handicapper

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The Hypothetical Handicapper, a sophisticated computer system similar to the IBM Watson powered by an Intel Pentium Processor, is provided as a public service and is a registered 501(c)(3) organization.

Thursday, January 30, 2014

Doctor Bob is one of the most respected handicappers around and justifiably so. He has a remarkable record of achievement betting against the line. He reports to have a success rate of 56% over the years and has created models that have others have tried to replicate and his bet announcements still move lines.

Bob has great confidence in his ability to beat the line and is remarkably forthcoming with his record. However, that record is achieved betting before his bets move the line. His paid subscribers must bet after the casinos have adjusted the line in an attempt to make the bets unprofitable. They will typically move the lines by a half to 1 point as soon as the line is released. In football, his higher weighted bets will move a full 2 points.

As more and more math whizzes have moved into the betting market, Bob's ability to beat the line also has been reduced as the line becomes tougher to beat and the casinos have factored many of his modeling advantages into the line. The advancement in analysis is definitely reducing his advantage over the betting market.

Over the last eight years, his college football bets have produced the following record:

His basketball record over the past 10 years on all star bets: 1354-1200 53.0%

The basketball free opinions on his site, which are plays he considers profitable but not sufficient to merit a 2-star bet, have hit at a rate of 52%.

Clearly, Bob's edge still exists but has been reduced from 56% to roughly 53% and below profitability if you include his opinions which are clearly unprofitable with a very large sample size.

Still, he has an edge and it would seem worth paying for. However, if we adjust his record so that pushes are counted as losses which definitely will be the case after the line move, and we also reduce the number of wins by the same amount given that the same number of wins can be expected to be lost with a push, we find his results drop below profitability as follows:

After adjusting for line moves, Doctor Bob's record is little better than betting exclusively underdogs and double digits underdogs as star plays. This is before taking his subscriber charges into play which are likely to reduce the totals to coinflip or average bettor status.

If we take subscriber charges into account, we can determine roughly what a subscriber would have returned by reviewing past performance as well.

Bob gives an example of investing $10,000 in his bets and placing 1.5% per star with also a slight suggestion toward betting 1% on the Strong Opinions. As a selling point, he states that $10,000 would gave grown to more than $600,000 by following his picks.

Over the last 13 years, Bob has averaged 9.2 stars of profit per season for an average $1,380 profit per year on a $10,000 gambling portfolio betting 1.5% per star. We can subtract an average of 1.4 stars of profit for his average of around 70 strong opinions at a success rate of 51.6% giving us a total of $1,240 in winnings assuming no line move.

Factoring in the line move, we can take the four prior years of performance as a good expectation of what to expect going forward in terms of pushes and assume 2.2 stars of profit lost to line moves per year along with a loss of 2 stars of profits on lost wins due to pushes on our adjusted line. On average we would win 7.8 stars of profit per year and lose 4.5 to line moves for a total of 3.3 stars taking our winning Doctor Bob seasons to a gain of $495 per year on our $10,000. Adding in a $895 subscription fee, we can expect to lose $400 on the average Doctor Bob winning season, even assuming a success rate equal to the last 13 years giving us an annual loss of 4% per season on a season that Doctor Bob can profit 12.5% per year betting his line.

Even if we assume an individual invests $100,000 gambling on Bob’s picks, we can confidently say that the bettor will win $4,950 per season along with the more economical $895 subscription fee gives us an average expected return of 4.1% per year on a season that Doctor Bob can profit 12.5% per year betting at his line.

Keep in mind, this assumes a 9.2 star profit as we have given him the benefit of the doubt of the last 13 years. Over the past eight years, he has averaged just 1.9 stars (3.3 without Strong Opinions) which is what I project he will average going forward if he can retain his level of skill. This would lower the average $100,000 betting portfolio to an average investment return to roughly 2% per year and possibly retaining his 4% return by avoiding the Strong Opinions. Add in the expected losses and pushes and we are at a loss or tiny profit.

The average bettor will likely darn the luck he has in getting losses on good bets and think they can still be profitable with just a little better luck. But any bettor can expect roughly 2 to 3 pushes per 100 bets. By adjusting the line by a half-point to 1 point at release, casinos have nothing to fear from Doctor Bob's bettors over time. This is not likely to affect bettors expectations much as betting is more about hope than reality.

Obviously, it is not Bob’s fault that a bettor cannot bet his line and it is completely fair for him to report his winning record as he does provide successful picks assuming bettors are able to obtain the line he recommends, and he makes every effort to help them do so. Bob remains a good handicapper, however, his success is diminishing and line moves will destroy any chance of winning over the long term. Bettors may still have a few winning seasons betting with Doctor Bob which will keep hope alive. But realistically, a bettor cannot expect to “invest” with him and produce a positive return.

While I still have great respect for Bob and his methods, it is clear that his bets are no longer worth paying for. He can still beat the line by betting his own bets, but a subscriber will lose in the long run if his performance over most of the last decade continues which we can expect it will.

Post Script: Interestingly, Bob has decided to bet more games this season after an offseason of research that led him to believe that he was passing up too many good plays. Therefore, he will basically be playing Strong Opinions as 1-Star bets. Based on his past performance over recent years, this would seem to be the opposite of what is needed to improve performance and it will be interesting to see how this strategy plays out in the coming years.

However, he is moving away from his situational angles and using more of his math-based research which will likely be a good move for his future performance as he is quite good at finding line value based on pure analysis. To date, I find no difference in his selection process other than his moving into betting quite a few totals plays per week which he has avoided in the past. Given his ability to find value with analysis, it seems unlikely that his moving into totals will affect his winning percentage negatively and will likely be a positive although probably not after line moves.

Wednesday, January 29, 2014

Like Doctor Bob Sports, Right Angle Sports has consistently beaten the betting market racking up 56% winning percentage in both football and basketball for years. This success has given the service quite a following and has captured the attention of the casinos. A release from RAS will not only move the line a point as with Doctor Bob, RAS lines are very often two points away from the original release.

Unlike Doctor Bob, which relies heavily on statistical models, RAS gets much of its performance by focusing on smaller conferences and fundamental analysis by reviewing games as well as doing some statistical analysis. It makes no claim to using successful math models and its edge has not shown much deterioration in recent years.

Any amount of reading of subscriber comments will often point to the fact that subscribers cannot get the lines released by RAS despite the services best intentions and strategies. As discussed in my posting “Adjusting Doctor Bob,” this is a prime consideration for any bettor wishing to follow RAS as it can mean the difference between winning and losing.

The following are the performance records for RAS college basketball for the last 5 years and its entire history of college football. Both have been solid 56% performers.

CBB: 864-668 .563
CFB: 571-453.558

RAS does not publish its record for pushes but we can conservatively estimate 2 pushes for every 100 bets and estimate a subscriber performance level. The adjusted returns:

CBB: 804-698 .535
CFB: 551-473 .538

Both adjusted returns are still profitable after accounting for losses and lost wins due to line movement although these numbers are likely a bit higher than can be expected because of the amount of 2-point line movement with their bet announcements as compared to Doctor Bob.

According to RAS own reporting, line moves reduce performance roughly 2 percentage points for football which is in line with my estimate.
http://i.imgur.com/Qxz4rcJ.png

Basketball could be a bit of a problem, however, as line moves reduced performance a full 5 percentage points on average according to RAS reporting. This could make RAS bets a loser based on its long-term performance record of 56%.RAS self reporting

RAS subscriptions are quite expensive at $1,195 per season for football and $2,395 for basketball. For a $10,000 betting portfolio, we can expect a record of 160-140 with college basketball and 31-27 for college football. The RAS web site recommends betting 1% per bet for an average handicapper under its money management information but 3 to 4% if you are extremely confident in your picks and can expect a 55 to 56% success rate. Given our confidence in RAS achieving that rate, we’ll assume a 3.3% weighting for each bet.

Betting $330 on each game, we can expect a profit of $8905 in college basketball with a $6500 profit after subscription fees. That’s a clear 65% profit so it seems we might still make good money betting with RAS for the college basketball season. A $100,000 portfolio would do much better with a $89.050 gain or 89%.

College football gives us a $390 profit on $10,000 which will provide a loss of $805 on a $10,000 betting portfolio. With a $100,000 allocation, a $4,000 profit can be expected which would be reduced to just $2,805 after the subscription and a solid 28% return.

Based on my rough estimate, it appears RAS is still profitable after adjusting for the line assuming you are rich enough to afford the amount needed to bet with them profitably keeping in mind that these numbers could be substantially reduced by significant line movement which might well cut profits in half or even eliminate them altogether.

It should be noted that RAS self-reporting is based on very high performance levels which it has not reached on average over the years. Adjustments to lower numbers could be quite ugly in college basketball and could be a reason RAS has been careful to report very high performance figures over a selected timeframe of 3 years. This seems a valid reason to proceed with caution as it seems to confirm my suspicion that much larger line movement greatly reduces its adjusted returns which are difficult to estimate. A 5%-point reduction in performance seems entirely reasonable for the average bettor.

In the end, while RAS' success rate is enviable, it seems that this service should probably be limited to high net worth gamblers with the sophistication to use automated betting technology which allows for the input of bets within seconds of release. Anything less is not likely to be particularly profitable long term, including betting pirated service play posts after the line move.